Wednesday, November 26, 2008

One can of course overdo the parallels between the Soviet Union and the United States, and how the collapse of the Soviet Union, rather than heralding the triumph of the United States's model, actually was the prologue to the collapse of high modernist states everywhere, including the United States. That's Dmitry Orlov's position, and it's a thought provoking one that just been echoed by a leading political analyst in Russia, who claims the U.S. is about to follow the exact same fate as did the Soviet Union:

US will collapse and break up, Russian analyst predicts

The United States will collapse under the burden of its financial crisis and fracture into six parts, a Russian political analyst has predicted.

By Tom Leonard in New York

Last Updated: 10:58PM GMT 25 Nov 2008

Igor Panarin, a professor at the Diplomatic Academy of the Russian foreign affairs ministry, said the economic turmoil in the US had confirmed his long-held belief that the country was heading for extinction in its present form.

In an interview with the Russian newspaper Izvestia, he outlined how the US would divide along ethnic and cultural lines.

They are: the Pacific coast with its growing Chinese population; the increasingly Hispanic South; independence-minded Texas; the Atlantic Coast; a central state with a large Native American population; and the northern states where – he maintains – Canadian influence is strong.

Alaska could be claimed by Russia, he said, claiming that the region was "only granted on lease, after all".

Of course, writing such a line must give a Russian great schadenfreudeliche joy, but that doesn't make it true. The United States is a much more thoroughly integrated place than the Soviet Union was in the 1980s, and while a massive collapse and deglobalization of our economy is certainly possible, there aren't any centrifugal forces affecting the territorial integrity of the country. A race war or failed state is much more possible.

The Millennials -- the 95 million Americans born between 1978 and 2000 -- are emerging onto the political and economic stage. A recent survey characterizes the Millennial worldview this way:

A commitment to the common good over individual gain; an ethos that reaches across traditional divisions such as race, ideology, and partisanship. The Millennials are not a "Generation Me" but rather a "Generation We." They are strongly progressive, socially tolerant, environmentally conscious, peace-loving, and poised to lead the biggest leftward shift in recent American history. They volunteer in record numbers and declare themselves ready to sacrifice their self-interest for the greater good. They do not fit neatly into any classic ideological category and are clearly eager to establish a new paradigm.

A comprehensive rejection of the country's current leadership and dominant institutions. Whether it is Congress and the federal government, major corporations, or organized religion, these young Americans believe the large institutions that dominate so much of our modern society have comprehensively failed, placing narrow self-interests ahead of the welfare of the country as a whole.

I wonder whether people under 30 don't always have opinions of this sort. In other words, I wonder whether these values are enduring features of this generation, or rather something that will change as they age. I'm mindful of the cliche that anyone who's not a liberal at age 20 doesn't have a heart and anyone who's not a conservative at 40 doesn't have a brain.

Saturday, November 22, 2008

Being able to manufacture and export a motor vehicle is considered, for many very good reasons, the hallmark of an effective industrial power. Not many countries can do this: India, Japan, Korea in Asia; the United States in Americas; Germany, France, Italy, the UK and Sweden in Europe. Countries that once had car-export businesses that were allowed to die don't make an encouraging list: Yugoslavia, Russia, East Germany... you get the picture. Without getting into the details of what automanufacturing means to the U.S. economy, the symbolic salience of the industry is enormous. And that's the context for the proposed bailout of Detroit.

But the thing is, it's clearly a bad deal for taxpayers. How do we know this? Because if it weren't a bad deal -- that is, a deal almost certain to lose money not just in the short but also in the long run -- then the auto industry execs would be flying their private jets to New York, Houston, or London to meet with private equity investors, not to Washington to meet with Congress. The sad but almost certain fact is that throwing wads of cash at Detroit to unblock that indusrty is unlikely to be any more effective than it is to throw wads of cash in a toilet when you want to unblock that.

The larger issue is that the U.S. auto industry, in terms of the way it is structured, the products it produces, and now the way it is attempting to save its sorry ass, is a symptom of everything that is wrong with the U.S. economy, and above all, with what you might call our economic culture. Michael Moritz, the legendary Silicon Valley investor, provides a long backgrounder on the history that led Detroit to its current sorry impasse, and puts paid to the arrant claims that this bailout is what will finally bring Detroit around to producing greener cars. Money:

No American politician – particularly any that have eyed the rustbelt’s 121 electoral college votes – have ever been able to summon up the courage to say that cheap petrol is not America’s birthright.

It has been a deadly curse. Except on rare occasions Americans have had no need to stop buying high cholesterol vehicles – pimped out vans in the 1970s, out-size SUVs in the 1980s and trucks in the 1990s. The only times that consumer excess was tempered was when petrol prices spiked following the 1973 oil shock, the fall of the Shah of Iran in 1979, the first Iraq war and this past summer. In current dollars, the price of petrol in the US has barely moved since the late 1970s.

As a nation we have lived well beyond our means and nowhere is this more apparent than at the petrol pump – where the extent of our national dissolution is on full display. The future of Detroit, the battle for the future of the US economy, the effort to wean ourselves from the teat of foreign oil and the attempt to clean up our air are all irrevocably linked. Just imagine what today’s American automobile fleet would look like if since the second world war – or even since 1980 – we had been made to pause before we filled our tanks. In 1999, for example, while we luxuriated in $1.26 for a gallon of petrol, Germans were paying $3.62 and the Japanese $3.26. It is no surprise that the Japanese, German or Korean manufacturers came to perfect the production of smaller, more fuel efficient engines and vehicles – their customers could not afford to run thirstier vehicles.

I have tried to make the case for a sizeable petrol tax to a number of politicians but have yet to encounter one who wants to discuss the idea seriously. It is just too dangerous to their future livelihood. Instead, in less time than it takes to switch on the ignition, they will say that this would be unfair to low-income Americans, or that it is the last thing the country needs in a time of recession, and then the conversation is steered to safer topics such as the virtues of carbon credits, the noxious ways of coal-powered generating plants or the pipe-dreams of hydrogen-powered cars.

The $25bn of low cost loans given recently to the auto industry to encourage the development of “greener” cars is the result of this woolly thinking. On the surface it seems laudable. Who would argue against more fuel efficient cars? But it is just a bailout in presidential clothing. The money would be far better used if it were directed towards basis research and development within our universities.

Amen. One of the first tests for Obama is whether he is willing to say no to Detroit.

There's a rumor out in the right-wing British papers that Obama plans to set up a "domestic spying" agency in the Department of Homeland Security, that will be modeled after Britain's MI5.

I have no idea if it's true, but I think it's a good idea. (This may surprise some readers. But attentive readers will note that Small Precautions, while critical of the Bush regime on many counts, has never criticized Bush on the substance of domestic wiretapping -- though the fact that it was not legislated and simply decided by diktat was reprehensible.)

If this comes to pass, prepare for a festival of hypocrisy from both right and left in this country

"Everyone is having these huge sales, and consumers know if they wait longer, the chances of them not having a good selection is fairly small and the chances are that the prices will be lower," said Charles McMillion, an economist who runs MBG Information Services. "So why buy today? This is exactly why economists are always scared to death of deflation."

I may have to go with deflation simply because the guy's name is McMillion. Seriously, Lacker, McMillion, Kashkari, this crisis has the best names, we are certainly living in interesting times, and it appears that Rahm Emanuel has read The Shock Doctrine:

He said the current economic crisis offers opportunities for change that wouldn’t have otherwise been possible. “Never let a serious crisis go to waste,” he said.

Now I actually agree with the idea of going "long and deep", and not just because it sounds dirty. We have been engaged in an ideological civil war in this country since 1994 and we need to end it.

But November 4th wasn't an ending, it was a turning point. If the election of Barack Obama was Gettysburg, we still have a long, hard slog to Appomattox. And winning isn't the only challenge. Many idiots have won wars (ahem, mission accomplished) the bigger challenge is achieving victory in such a way that you can also win the peace. My nightmare scenario right now, and Waxman's chairmanship just feeds this, is scorched earth progressivism for two years and then a Reaganesque Reconstruction.

Thursday, November 20, 2008

I just plugged Small Precautions into TypeAnalyzer, which claims to identify what "type" you are in your blog. Here's what it came up with:

The logical and analytical type. The Thinkers are especialy attuned to difficult creative and intellectual challenges and always look for something more complex to dig into. They are great at finding subtle connections between things and imagine far-reaching implications.

They enjoy working with complex things using a lot of concepts and imaginative models of reality. Since they are not very good at seeing and understanding the needs of other people, they might come across as arrogant, impatient and insensitive to people that need some time to understand what they are talking about.

Wednesday, November 19, 2008

I realize that the subtext of this post is how out of touch I am, but still, I just learned about this site today, and it reminded me of why the Internet is so awesome.Update: What kind of a sick mind wakes up one morning and thinks to himself of a site like this, thinks that a site like this will meet an unmet need? But there clearly is: each posting gets close to 100 comments!

Nicholas Nassim Taleb, the man who coined the an original cliche in describing "black swan" events, gives birth to the mother of all hype, declaring the current financial crisis to be not just the greatest crisis since the Great Depression, but since the American Revolution.

Now, I'm not averse to extremist thinking, but hey: a bigger crisis than the Civil War?

I have no idea whether Hillary Clinton will make a good Secretary of State, but as a matter of politics, Obama giving her the spot is brilliant. In ascending order of Machiavellian-ness:

It embodies the "team of rivals" approach to governing that Obama has promised to follow. (As an aside, I note that Obama's modeling himself after Lincoln is not exactly modest, but also hardly a bad thing. For those on both the left and the right who either hope or worry that Obama is a secret radical, it's worth remembering what a profound moderate Lincoln was.)

It neutralizes the biggest potential threat to Obama in 2012. Over the past 40 years, Presidents up for reelection who face serious rivals in the primaries always lose (Ford '76 -- from Ronald Reagan; Carter '80 -- from Teddy Kennedy; Bush '92 -- from Pat Buchanan) whereas those who don't, always win (Nixon '72, Reagan '84, Clinton '96, Bush '04). Hillary is Obama's only current serious threat for a mid-term rival, and this neutralizes her

Watching this debate unfold I am reminded of P.J. O'Rourke's coverage of the 1990 Nicaraguan election in which the Sandinistas were removed from power. One of the American election monitors --who went down expecting to validate a Sandinista victory-- lamented to O'Rourke that instead of voting with their brains the Nicaraguan people “voted with their stomachs."

If, as Paul Krugman presents, "we’ve become a banana republic with nukes" then the 1990 Nicaraguan election may provide the answer to the left-right debate. The center has no philosophy; they have needs, desires and fears. Whichever candidate or party can best convince the middle that they will fulfill the first two and allay the last will capture the vote.

The center doesn't care about politics, they care about competence. And after eight years of mind-boggling mismanagement and scorched earth politics the Republicans have no credibility in that area.

Taking another note from Nicaragua, after losing in 1996 and 2001 Daniel Ortega returned to power in 2006. I honestly don't think it matters if Obama, Reid and Pelosi decide to push change fast or slow, as long as it is smart change, and most importantly it works.

Sunday, November 16, 2008

As previously mentioned, I gave a lecture two weeks ago at the European Futurists Conference on the the global illicit economy, which forms the base of what I call "deviant globalization." The video of the event is now online:

Over the past generation, conservatives have managed to popularize the concept of "moral harzard" -- the concept that if you prevent people from feeling the full downside brunt of their poor choices, they will consistently take foolish risks. It's a real problem, and having the prudent subsidize the imprudent is patently unfair.

However, there's an opposite risk associated with trying to make everybody solely responsible for their own risks, and that is the lesser-known problem of "adverse election": namely the problem that you can't run any kind of social program if the people who have less than average need for it are allowed to opt out, since this will steadily erode the quality of the pool that is left.

Imagine a population of a million similar families, living in a million more or less similar houses. From long experience it is known that the chance that any given family will suffer a severe fire in any given year is about one in ten thousand. In other words, we can expect about a hundred fires per year. The same experience tells us that the average amount of damage per fire is $200,000. So the total damage per year is some $20 million. Serious house fires are rare, but when one occurs it is devastating to the unlucky family.

The existence of fire insurance makes an enormous difference. If each of the million families pays an insurance premium of $20 a year, all damages can be reimbursed. Major house fires would still not be welcome events; but they would not be financially catastrophic. The small probability of a large loss is eliminated, and replaced by a small but certain cost. Insurance companies would have to charge a bit more than $20 per house, to cover administrative costs and profit. Also companies would have to build up a reserve, to allow for the fact that annual losses would surely fluctuate around the average of $20 million, with an occasional bad year. On the other side of the ledger, investment of the reserves, presumably in reasonably safe and liquid securities, would offset at least some of the costs of the system.

Nevertheless, fire insurance has its problems, two in particular. Notice, first, that the existence of fire insurance does nothing to diminish the number of fires. Insurance is a way of pooling or sharing risks, not of eliminating them. In fact the opposite is true: the existence of fire insurance probably increases the number of fires. In the absence of insurance, one has to expect that home owners will be very careful about loose matches, old soldering irons, and other such dangers. The knowledge that they are fully covered may lead to some carelessness, and to more fires. This sort of effect is called "moral hazard." (It is why subsidized flood insurance encourages people to live in flood plains.) Insurance companies have devices to discourage moral hazard. Deductibles and co-payments are two such devices: no fire is costless to the insuree. Required precautions are another device; every insured home is supposed to have an approved extinguisher and smoke alarms.

The second problem is different. All houses are not alike, after all. Some are more fire-prone than others. To take an extreme case, suppose that 90 percent of the million homes have, for various reasons, essentially no risk of fire. The hundred fires per year all come from the remaining 100,000, each with a probability of one in one thousand. They are responsible for the annual damage cost of $20 million. The 900,000 fire-free home owners very likely know this. They are in effect subsidizing the fire-prone houses, so they will choose not to buy insurance. Only the fire-prone homes will be in the market.

This is called "adverse selection." To be viable, insurance companies will have to charge a premium of $200 per year, and even some of the fire-prone home owners may balk. You can easily imagine how the whole insurance market might unravel if there are houses of many degrees of fire-proneness: each time the rate rises, the least vulnerable, least fire-prone customers may drop out, leading to a still higher rate and still more dropouts. Insurance companies may respond by refusing coverage altogether to very fire-prone houses (or refusing health insurance to people who look as if they might actually become seriously—or expensively—sick). Modern information technology and data-mining techniques make it possible for insurance companies to pinpoint the known risks associated with individual applicants and quote "appropriate" rates.

Naturally, they do; but this only further undermines the insurance principle. Unless something drastic is done about it, adverse selection can lead to a situation in which precisely those who need insurance most cannot get it, or cannot afford it. Keep in mind that it is in the self-interest of the safe or healthy not to be in the same insurance pool, paying the same rate, as the fire- or sickness-prone, because they will be paying in more than the costs they incur, so that others can pay in less. In such cases, if adequate insurance is to be provided, there may have to be external regulation or direct public provision.

Now, the obvious political point here is that the conservative governing philosophy is focused almost exclusively on eliminating moral hazard, but completely ignores the problems associated with permitting adverse selection.

As those of you who have been reading Small Precautions know, this blog was launched exactly four years ago, in the aftermath of Kerry's loss to Bush in the 2004 election. Part of the motivation for blogging was as a kind of political therapy, as a way to process my disbelief that the country could possibly have reelected someone as criminally incompetent as Bush, and in part as a way to offer some small token of dissent and resistence to the horror of having that guy at the helm for another four years. (Confession: it was also partly about relieving my boredom with the job I had then.)

However, now that we're entering a new political phase for the country, it seems reasonable that Small Precautions should also take a new form, and to that end, I am introducing a new contributor. The goal of this blog will no longer be simply to register the trends and politics that seem to matter most in a world politically dominated by feckless conservatives, but instead to pluralize the discussion to include a variety of interests and points of view, some of which may in fact by at odds with my own. The model here will be other group blogs, such as Crooked Timber, in which the unifying element for the writers is less a unified partisan orientation (as is the case for blogs like Daily Kos or the Corner), and more of a shared sensibility, which in our case, might well be termed an appreciation for the political sublime.

With that, let me introduce my friend Brad Peck, another disloyal clerk. Brad lives inside the Beltway and thus has a fake job, he actually gets paid to read, and respond, to blogs. In the process he often discovers an article or opinion which, though interesting, is NGW, not germane for work. Brad works at the U.S. Chamber of Commerce, formerly did work for the NSA, and before that was in the Air Force. At a recent dinner this background led one politico to ask him "So how are you a Democrat?" His response, "We are a very big tent."

Friday, November 14, 2008

Yesterday Charlie Rose interviewed Steve Pearlstein of the Washington Post about this weekend's financial summit, and Pearlstein lays out that the agenda is to talk about architecting a new set of (or rearchitecting existing) international financial institutions. The key tradeoff that countries face is between, on the one hand, giving up sovereignty over financial and economic matters to an undemocratic, unaccountable, "global central bank" or else, on the other hand, facing more of these uncontrolled financial flows which periodically erupt into financial catastrophes.

The other key point that Pearlstein makes is that the key political inhibitor tothe building of such new institutions may not be the sovereign suspicions, but actually the concrete implications for the global balance of financial power. Currently, political authority over the key global financial institutions is basically divided between the Western Europeans and Americans, which reflects the actual allocation of global power at the time in the institutions were set up, in in mid-1940s. Any serious reform will have to include a recalibration of that power to reflect the new preponderance of power. In practice, this means giving China and Japan an equal seat at the table, maybe India and Brazil, too. It also means the relative decline of the Europeans, especially Italy and France. (That the French will be inevitably downgraded in any reconfiguration is part of what makes Sarkozy's championing of this process a little weird. Maybe he's figuring that by leading it the French can keep their seat at the table; any why not -- something similar worked for de Gaulle, after all.) The key question is whether there has been enough global suffering yet that the losers in the redistribution of power will be willing to go along with it. I don't think we're there yet.

Five weeks ago I wrote a post about the financial instability scenario planning exercise I participated in back in March, where we thought through the various ways that the mountain of interlocking debts might shake out. As I mentioned then, we talked for a whole afternoon until we came to the conclusion that the money center banks themselves, the epicenters of the modern financial system, might eventually come under threat and require nationalization. "Nationalize the banking system?" asked one of my savviest and most jaundiced colleagues. "That could never happen."

Citi might well turn out to be Hank Paulson's largest and biggest headache. There's no one he can sell it to -- it's far too big already. Which means that Paulson's only real option, if things deteriorate much further from here, is nationalization. Bits of it could be sold, at a price -- the retail bank to Santander, perhaps; other bits to JP Morgan or Goldman Sachs -- but the losses to the taxpayer would be enormous, and the disruption associated with breaking Citi up and then trying to integrate the pieces in the middle of a major financial crisis would likely be devastating to the economy.

Thursday, November 13, 2008

Josh Marshall quote a reader today cheering the staying power of Palin, saying that he "quite agrees" that from a partisan perspective, "the more Palin the better," as he believes it will prolong the GOP's season in the wilderness.

I disagree.

The real threat is not Palin. The real threat is Palinism, that is, the destruction of what Kevin yesterday refered to as "consensual cultural barrier" against the nomination for President of persons that are fundamentally uninterested in and uninformed about national policy at nearly every level.

A meaningful democracy requires not just a set of formal rules about political behavior, concerning voting, apportionment and the like. That's the easy part about democracy; anyone can write a constitution and some election laws. But those laws aren't worth a thing if you don't have deep culturally-rooted norms about political decency.

(This inisight is available to anyone who has ever taken a Comparative Politics course, even if it was unavailable to the neocons who decided that it was a good idea to try to democratize the Middle East at gunpoint.)

What's so insidious about Palin -- or rather, Palinism -- is that it's yet one more example of how the GOP has systematically set out to destroy the basic political-cultural norms that are required to make democracy work. These are norms that cannot be legislated, but must be in place in order for democracy to function. Concepts like "a loyal opposition"; the idea that mobs and judges should not interfere in recounts; the idea that wars should not be sold to the public on false pretenses; the idea that transparency is an essentially desirable element in politics; or the idea that policy knowledge and competence are table stakes for senior political leadership. Again, none of those things can be legislated--they have to exist as norms. And norms only exist when everyone (or anyway, an unquestionable majority) tacitly agrees not to violate them.

The longer Palin lingers as a legitimate presence within the GOP, the more it undermines the cultural-political norm that policy knowledge and competence are table stakes for senior political leadership--a crucial political-cultural norm. That she can be taken seriously is a disaster, even if she personally fails. The fact that she is being take seriously is a terrible precedent. Know Nothingism (for Palin is the direct heir of that venrable tradition in American politics) needs to be quashed. I wouldn't blithely assume that it will sink under its own weight.

The GOP is steadily squeezing the norms of civility and decency out of the tube of democracy. Once that tube is empty, it isn't worth a thing.

Emboldened by EU-inspired reforms, gays are starting to speak up. In June Istanbul hosted the country’s biggest gay pride parade, with hundreds of unfazed riot police looking on. The parade featured veiled transvestites protesting against the ban on Islamic-style headscarves at universities. A vocal band of pious women is now fighting discrimination against cross-dressing compatriots. This alliance is just one example of Turkey’s unusual mix of Islam and democracy.

Friday, November 07, 2008

David Milne has a piece on the various foreign policy intellectuals who may become part of the Obama administration. "In no other country," he observes, "do elected leaders take political scientists so seriously." After reviewing the leading academic candidates for senior roles in the administration, he then asks the money question, namely, Is having intellectuals in the cabinet a good thing?

The good news is that Barack Obama's intellectuals are fine scholars who have produced some thought-provoking books and articles on the best way to deploy American power. The bad news is that Walt Rostow and Paul Wolfowitz were also fine scholars who had produced interesting books and articles on the best way to deploy American power.

So how might this new generation of foreign policy thinkers avoid the mistakes made by their predecessors?

Well, one problem has arisen in cases in which the academic in question has a cherished "theory" to test, and therefore misreads evidence to suit intellectual preconceptions. Through the Kennedy and Johnson administrations, for instance, Rostow believed that the thesis presented in his 1960 book, "The Stages of Economic Growth" -- that all nations are driven by economic self-interest in peace and war -- rendered North Vietnam's infrastructure critically vulnerable to American bombing. "Ho Chi Minh has an industrial complex to protect," he explained. "He is no longer a guerrilla fighter with nothing to lose."

But Rostow was wrong. North Vietnam's leadership was willing to absorb serious damage to further the overarching goal of reunification. Rostow failed to appreciate the power of nationalist ideology.

Similarly, Wolfowitz theorized throughout the 1990s that liberating Iraq from Saddam Hussein would lead to the eventual democratization of the Middle East, a region better known for its authoritarian regimes than for participatory politics. It is perhaps too early to declare that the thesis was entirely wrong. But the last five years have not been encouraging.

I must say that I am vaguely gratified, in a bitter sort of way, that Paul Wolfowitz is becoming to this generation what Walt Rostow was to a previous one -- that is, a byword for a misguided arrogance that thinks good theory can be used to force other people to become free. I like to imagine that this blog has done a small part to contribute to that emerging consensus.

My biggest worry all along about Obama was that he might not have enough of a vicious streak. All that post-partisan stuff never sat too well with me, not because I like partisanship, but because that kind of thinking can shade into not knowing who your enemies are, and not having the instincts to stick the knife in when the opportunity presents itself.

Obama dealt with this concern by pointing out that he was winning the race, and that everyone needed to calm down, which was a good point, but didn't go to the question of whether he had killer instinct. I continue to see Obama's victory as at least in part a result of assisting with the GOP's political suicide, more than as an affirmative push of this country in an entirely new direction. Yes, a black liberal won the election this year, mirabile dictu, but to me that primarily underscored how badly the GOP had fucked the country up, more than it proved Obama's killer instincts.

Now, let me be clear. It's not that I was sure that Obama lacked a killer instinct, it's rather than he had done little to prove he has a killer instinct. I just wasn't sure. Obama had plenty of other virtues that made me support him, but this particular issue was a question mark to me about how effective he would be at actually governing.

Obama's first big announcement since winning on Tuesday, naming Rahm Emanuel as his Chief of Staff, goes a huge way toward allaying my concern. By all reports, Emanuel has brass balls, which is apparently a family trait, since his dad is a former member of the Irgun (the Israeli terrorist organization), and his brother is the killer Hollywood agent Ari Emanuel that the Ari Gold character on Entourage is modeled after. The fact that the Israelis regard Rahm as one of their own may be a good or bad thing, but in terms of demonstrating Obama's desire to kick some ass, the Emanuel appointment is an unambiguous positive.

Update: In terms of what the Emanuel appointment suggests about Obama's likely Palestine policy, I can do no better than quote Emanuel's father, who offered the Jerusalem Post this adorable quote: "Obviously he will influence the president to be pro-Israel.... Why wouldn't he be? What is he, an Arab? He's not going to clean the floors of the White House."

Wednesday, November 05, 2008

The publicly available exit polls now break down data on income and education by racial group. Among all whites without college degrees (40 percent of the electorate), Obama lost by a whopping 18 points. But among whites making $50,000 per year or less (a quarter of the electorate), he lost by a mere 4 points.

Which is to say, the big divide last night wasn’t between working-class whites (i.e., whites without college degrees) and educated whites. It was between working-class whites who are relatively well off, and working-class whites who aren’t. The aforementioned numbers imply that Obama struggled hugely among working-class whites making more than $50,000 per year, but did well among those making less than that. The upshot was that, despite losing the white working-class by wide margins nationally, Obama came reasonably close in the economically depressed states of the industrial Midwest (down only 8 in Ohio and Indiana, actually up 6 in Michigan). Hence the electoral college landslide.

The chart I want to see would compare voting patterns among those earning more or less than $50K (or perhaps more income brackets) across various education levels. My hypothesis about what the data would say goes something like this:

Relatively uneducated but above-median income white folks are hard-core for the GOP. These people not only vote their pocketbook, but also have nothing but disdain for pointy-headed intellectuals who use learning to put on airs. Sarah Palin is the apotheosis of this segment.

The highly educated white vote (college+) is likely to lean Democratic across all income levels, except in the highest income brackets (where, again, the pocketbook comes into play).

The third segment -- namely less educated (high school or less), low income voters -- is the most interesting. With this group, I'd guess that normally they vote their cultural prejudices, except during times of severe economic hardship, when, at the end of the day, they'd rather have a Democrat. This group is the key swing constituency.

I really think the dramatic and undeniable collapse of the deregulated financial system in September and October is what saved Obama's campaign. Remember that before Lehman Brothers collapsed on September 14, McCain had essentially caught up with Obama campaign by using Sarah Palin to rev up enthusiasm in that third segment.

What Lehman Brother's collapse (and the subsequent implosion of the stock market, the partial nationalization of the banking system, and the obvious oncoming trainwreck in the real economy) did, as Mark Danner so vividly described it was to "strike like a bolt of lightning, illuminating for all to see the ruins of the economic landscape." And with those ruins apparent -- and so evidently the result of a generation of failed GOP macroeconomic and deregulatory jihad -- all the Palin claptrap about bulldogs, moose, and pigs became just cheap talk, allowing Obama to coast to a broad victory.

Saturday, November 01, 2008

Bush: 'Our Long National Nightmare Of Peace And Prosperity Is Finally Over'

WASHINGTON, DC–Mere days from assuming the presidency and closing the door on eight years of Bill Clinton, president-elect George W. Bush assured the nation in a televised address Tuesday that "our long national nightmare of peace and prosperity is finally over."

"My fellow Americans," Bush said, "at long last, we have reached the end of the dark period in American history that will come to be known as the Clinton Era, eight long years characterized by unprecedented economic expansion, a sharp decrease in crime, and sustained peace overseas. The time has come to put all of that behind us."

Bush swore to do "everything in [his] power" to undo the damage wrought by Clinton's two terms in office, including selling off the national parks to developers, going into massive debt to develop expensive and impractical weapons technologies, and passing sweeping budget cuts that drive the mentally ill out of hospitals and onto the street.

During the 40-minute speech, Bush also promised to bring an end to the severe war drought that plagued the nation under Clinton, assuring citizens that the U.S. will engage in at least one Gulf War-level armed conflict in the next four years.

"You better believe we're going to mix it up with somebody at some point during my administration," said Bush, who plans a 250 percent boost in military spending. "Unlike my predecessor, I am fully committed to putting soldiers in battle situations. Otherwise, what is the point of even having a military?"

On the economic side, Bush vowed to bring back economic stagnation by implementing substantial tax cuts, which would lead to a recession, which would necessitate a tax hike, which would lead to a drop in consumer spending, which would lead to layoffs, which would deepen the recession even further.

Wall Street responded strongly to the Bush speech, with the Dow Jones industrial fluctuating wildly before closing at an 18-month low. The NASDAQ composite index, rattled by a gloomy outlook for tech stocks in 2001, also fell sharply, losing 4.4 percent of its total value between 3 p.m. and the closing bell.

Asked for comment about the cooling technology sector, Bush said: "That's hardly my area of expertise."

Turning to the subject of the environment, Bush said he will do whatever it takes to undo the tremendous damage not done by the Clinton Administration to the Arctic National Wildlife Refuge. He assured citizens that he will follow through on his campaign promise to open the 1.5 million acre refuge's coastal plain to oil drilling. As a sign of his commitment to bringing about a change in the environment, he pointed to his choice of Gale Norton for Secretary of the Interior. Norton, Bush noted, has "extensive experience" fighting environmental causes, working as a lobbyist for lead-paint manufacturers and as an attorney for loggers and miners, in addition to suing the EPA to overturn clean-air standards.

Bush had equally high praise for Attorney General nominee John Ashcroft, whom he praised as "a tireless champion in the battle to protect a woman's right to give birth."

"Soon, with John Ashcroft's help, we will move out of the Dark Ages and into a more enlightened time when a woman will be free to think long and hard before trying to fight her way past throngs of protesters blocking her entrance to an abortion clinic," Bush said. "We as a nation can look forward to lots and lots of babies."

Continued Bush: "John Ashcroft will be invaluable in healing the terrible wedge President Clinton drove between church and state."

The speech was met with overwhelming approval from Republican leaders.

"Finally, the horrific misrule of the Democrats has been brought to a close," House Majority Leader Dennis Hastert (R-IL) told reporters. "Under Bush, we can all look forward to military aggression, deregulation of dangerous, greedy industries, and the defunding of vital domestic social-service programs upon which millions depend. Mercifully, we can now say goodbye to the awful nightmare that was Clinton's America."

"For years, I tirelessly preached the message that Clinton must be stopped," conservative talk-radio host Rush Limbaugh said. "And yet, in 1996, the American public failed to heed my urgent warnings, re-electing Clinton despite the fact that the nation was prosperous and at peace under his regime. But now, thank God, that's all done with. Once again, we will enjoy mounting debt, jingoism, nuclear paranoia, mass deficit, and a massive military build-up."

An overwhelming 49.9 percent of Americans responded enthusiastically to the Bush speech.

"After eight years of relatively sane fiscal policy under the Democrats, we have reached a point where, just a few weeks ago, President Clinton said that the national debt could be paid off by as early as 2012," Rahway, NJ, machinist and father of three Bud Crandall said. "That's not the kind of world I want my children to grow up in."

"You have no idea what it's like to be black and enfranchised," said Marlon Hastings, one of thousands of Miami-Dade County residents whose votes were not counted in the 2000 presidential election. "George W. Bush understands the pain of enfranchisement, and ever since Election Day, he has fought tirelessly to make sure it never happens to my people again."

Bush concluded his speech on a note of healing and redemption.

"We as a people must stand united, banding together to tear this nation in two," Bush said. "Much work lies ahead of us: The gap between the rich and the poor may be wide, be there's much more widening left to do. We must squander our nation's hard-won budget surplus on tax breaks for the wealthiest 15 percent. And, on the foreign front, we must find an enemy and defeat it."

"The insanity is over," Bush said. "After a long, dark night of peace and stability, the sun is finally rising again over America. We look forward to a bright new dawn not seen since the glory days of my dad."